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Can local news scale? The Alternative Press tests a franchise model in New Jersey

by: Michele McLellan |

Let's face it. Most independent local news outlets operate on tight margins and likely will do so for the foreseeable future. Local is a tough environment.

Patch famously tried to scale to big profits with lean operations and a fast ramp up that saw it launching hundreds of sites. But the AOL venture failed to get traction.

Independent publishers may better focus on the economies that derive from scaling from the ground up. Some are doing so by opening new sites in adjacent communities - think Brentwood Home Page in Tennesee, Riverhead Local on Long Island, Davidson News in North Carolina, and ARLnow in northern Virginia. Others are joining advertising networks - think Connecticutt's Independent Media Network.

The Alternative Press, based in New Jersey, is pioneering a franchise model that provides a common tech platform, regional ad sales and shared editorial support, as well as business and sales training. 

So far, it's a growing endeavor. The Alternative Press has doubled the number of participating sites to nearly 30 in the past year in New Jersey and, recently, Pennsylvania, according to founder Michael Shapiro.

The idea is simple: A local resident or group of residents can launch and own a community news site using The Alternative Press platform. The publisher an annual fee and a percentage of revenue. In exchange, TAP provides significant tech, business and editorial support to help assure success.

Shapiro founded The Alternative Press in 2008 with a handful of sites that he operated. Shapiro gave up his work as an attorney in New York after his son, then one, needed heart surgery and Shapiro realized he wanted to stay closer to home in New Providence and see more of him.

As the number of sites grew beyond what he and his wife could operate, Shapiro said he hit on the idea of licensing would-be local publishers in nearby towns to use The Alternative Press's web platform. As TAP found it needed to increase the support it provided to help the publishers be successful, Shapiro said that legally it had to convert from a licensing model to a franchise model in the past year.

Shapiro said a key difference is franchisee publishers "own their business and have the right, eventually, to sell it. They are building equity as they build their businesses."

Some of the publishers are journalists, some are not, Shapiro said. Some sites are run by a small group of 2-4 people who work at it part-time, others by an individual. The key commonality, he said, is their connection to their community. 

"This is why I think efforts to scale hyper local have not been success," Shapiro said. "Here the people are from that town, they are connected to that town."

Shapiro said the publishers typically have two motivations: "They are able to raise a profitable business in their own town. Second, they are able to make a difference in their communities by doing this."

Jackie Lieberman, who publishes The Alternative Press in Westfield, N.J. said she would not be able to run the site without help from the franchise. Lieberman, a former magazine journalist, said the site is the focus of her work life but she has two small children at home.

"I work all morning, pick up the kids, and hope nothing happens in the afternoon," Lieberman said. She may make calls from home and sometimes works evenings.

Being virtually a one-person operation is challenging she said. She handles editorial and most of the ad sales with help from a commission sales person.

"It's a challenge to try to be everywhere at once and still have a life," she said.

Nonethless, she's growing the business. Last year, her first as a licensee, she brought in $25,000 in revenue; this year she expects to double that to $50,000.

Shapiro said TAP is heavily invested in the success of the publishers. "If they're not producing, we're not making money. Our missions are totally aligned."

TAP provides the web platform as well as tech support; training, including sales training; customer relations management systems, and editorial and social media support. TAP has a managing editor, an experienced newspaper journalist, who reads stories on the sites each day - often making suggestions or correcting spelling or grammar. Another editor helps publishers with sports coverage, something Lieberman says has been extremely helpful since she doesn't know sports.

Shapiro said TAP is not seeking editorial control. He also believes the sites should be distinct for their towns even though the share a CMS. TAP plans a redesign in September that will allow greater customization of individual sites.

The cost of a franchise varies, depending on the size of the town or towns covered, he said. Sites operates in towns ranging in size from 10,000 to 70,000 population - "The sweet spot seems to be twenty to thirty thousand," Shapiro said.

Franchisees pay at annual fee, starting at $3,750 to $7,750 the first year and increasing after that to $5,750 to 11,750 annually. Shapiro said the fee is based on the population of the community served and the number of businesses that are located there. Publishers also pay a royalty of 10 percent of annual revenue - this decreases to 5 percent of revenue once they hit $100,000.

Shapiro said franchise law precludes him from discussing revenues of specific sites. He had previously said he believed sites in operation under the licensing model could earn $50,000-$100,000. He said TAP's goal is for any site to reach $100,000 in annual revenue after three years in operation, although that's not a requirement.

Shapiro has tapped into a need. The services The Alternative Press provides to its franchisees are consistent with needs we've discovered developing grant-funded training and support programs for independent publishers, starting with Block by Block news entrepreneur training, which developed into CJET.

Indy purists may push back, saying publishers are better off going it alone. That may be the best solution for some. But having seen site after site fail because a committed publisher simply couldn't handle the tech and build the business fast enough, I think a franchise model is worth considering elsewhere.

Shapiro said he has received inquiries from outside the region. But he does not think expansion is feasible unless multiple sites want to launch in a given area.

In the dynamic, experimental world of local news, The Alternative Press is worth watching. Shapiro clearly has his ear to the ground - listening to who wants to be a community publisher and what they need to succeed. That's valuable information for his evolving business model and the broader field.

Note: Michael Shapiro will be part of a panel I am moderating later this month at Innovating the Local News Ecosystem conference at Montclair University in New Jersey.)

Michele McLellan

Michele McLellan is a writer, editor and consultant who works on projects that help strengthen the emerging local news ecosystem,
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